Shenwan Hongyuan Group: Maintains "buy" rating for EAST BUY (01797), optimizing product portfolio and significantly improving operational efficiency.

Shenwan Hongyuan Group has released a research report stating that it maintains a "buy" rating for EAST BUY (01797). The company is actively promoting a strategy of multiple live broadcast rooms with multiple hosts, continuously developing high-margin self-operated products, and has a content advantage in the GEO marketing environment, with a strong increase in gross profit margin in 1HFY26. The adjusted net profit for FY26 to FY28 is raised to 500 million/590 million/720 million yuan (originally forecasted as 410 million/490 million/600 million yuan), and the target price is raised to 25.4 Hong Kong dollars (originally forecasted as 23.1 Hong Kong dollars). The main points of Shenwan Hongyuan Group are as follows: Performance Overview EAST BUY's revenue for 1HFY26 (from June 2025 to November 2025) was 2.31 billion yuan, a year-on-year increase of 5.7%; net profit attributable to owners of the company was 239 million yuan, turning from loss to profit. The increase in company revenue was driven by the sales of self-operated products, and the profit turnaround came from the improvement in product gross profit margin. Continued focus on self-operated products, balancing product innovation with operational efficiency improvement In 1HFY26, the company's GMV was 4.1 billion yuan, a year-on-year decrease of 14.6%. Among the GMV composition, self-operated products accounted for 2.16 billion yuan, while third-party product GMV accounted for 1.94 billion yuan. Excluding the GMV from the cooperation with Huitong live broadcasting room in 1HFY25 (which was divested in August 2024) for comparison, the GMV from live streaming sales on the TikTok platform turned positive year-on-year in July 2025 and continued to grow until November 2025. In 1HFY26, the company continued to develop new self-operated products, with a total of 801 products, an increase of about 9.4% compared to the end of FY25. With the deepening of the supply chain and the expansion of self-operated product categories, the gross profit margin of the company's self-operated products is expected to increase from 21.5% in 1HFY25 to 33.7% in 1H26, a year-on-year increase of 12.3 percentage points. At the same time, the development of new self-operated products has shifted from pursuing quantity to pursuing higher repurchase rates, thereby driving larger purchasing volumes for individual products, reducing the unit purchase price of raw materials or finished products, and increasing the gross profit margin. Multi-platform sales strategy EAST BUY continues to open new accounts on TikTok, and plans to launch a long-term recruitment plan to attract new hosts. At the same time, the company also operates online stores on different platforms such as WeChat mini programs, WeChat stores, Tmall, Jingdong, Pinduoduo, and Xiaohongshu. The company's first offline experiential store is set to open at Beijing Centergate Technologies in 2026, as another step in deepening the channel layout. Large user base, potential for improvement in paid conversion In 1HFY26, EAST BUY APP is expected to have over 300,000 paid fans, continuing to grow compared to the 264,000 at the end of FY25. With 42.79 million fans on TikTok accounts (only counting EAST BUY's main account, and 6 matrix accounts including books, self-operated products, beauty lifestyle, fresh, clothing, etc., as of November 30, 2025), the company has a large fan base, laying a broad foundation for the expansion of paid users. The bank expects that the number of paid users will continue to grow in the future and drive the company's GMV growth. Risk Warning The decline in content quality of EAST BUY could lead to a decrease in user stickiness, affecting GMV.